Climate Risk Management For The U.S. Cellulosic Biofuels Supply Chain

Climate Risk Management xxx (2014) xxxxxx
Contents lists available at ScienceDirect
Climate Risk Management

journal homepage: www.elsevier.com/locate/crm
Climate risk management for the U.S. cellulosic biofuels supply

chain
Matthew Langholtz a,, Erin Webb a, Benjamin L. Preston a,b, Anthony Turhollow a,
Norman Breuer c, Laurence Eaton a, Anthony W. King a,b, Shahabaddine Sokhansanj a,
Sujithkumar Surendran Nair a,b, Mark Downing a
a
b
c
Environmental Sciences Division, Oak Ridge National Laboratory, United States

Climate Change Science Institute, Oak Ridge National Laboratory, United States
Rosentiel School of Marine and Atmospheric Science, University of Miami, United States
a r t i c l e
i n f o
Article history:
Available online xxxx
Keywords:
Bioenergy
Climate change
Climate extremes
Risk management
Adaptation
a b s t r a c t
As U.S. energy policy turns to bioenergy, and second-generation biofuels in particular, to
foster energy security and environmental benets, consideration should be given to the
implications of climate risk for the incipient bioenergy industry. As a case-in-point, we
review evidence from the 2012 U.S. drought, underscoring the risk of extreme weather
events to the agricultural sector in general, and the bioenergy supply chain in particular,
including reductions in feedstock production and higher prices for agricultural
commodities and biofuels. We also use a risk management framework developed by the
Intergovernmental Panel on Climate Change to review current understanding regarding
climate-related hazards, exposure, and vulnerability of the bioenergy supply chain with
a particular emphasis on the growing importance of lignocellulosic feedstocks to future
bioenergy development. A number of climate-related hazards are projected to become
more severe in future decades, and future growth of bioenergy feedstocks is likely to occur
disproportionately in regions preferentially exposed to such hazards. However, strategies
and opportunities are available across the supply chain to enhance coping and adaptive
capacity in response to this risk. In particular, the implications of climate change will be
inuenced by the expansion of cellulosic feedstocks, particularly perennial grasses and
woody biomass. In addition, advancements in feedstock development, logistics, and
extension provide opportunities to support the sustainable development of a robust U.S.
bioenergy industry as part of a holistic energy and environmental policy. However, given
the nascent state of the cellulosic biofuels industry, careful attention should be given to
managing climate risk over both short- and long-time scales.
Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Introduction
The development and use of biofuels as an energy source has increased rapidly in recent years, both in the United States
and internationally. Estimates from the energy industry indicate that global use of biofuels increased by a factor of ve from
Corresponding author. Address: Environmental Sciences Division, Oak Ridge National Laboratory, PO Box 2008, One Bethel Valley Road, Oak Ridge, TN
37831-6253, United States. Tel.: +1 865 574 6520; fax: +1 865 576 9939.
E-mail address: langholtzmh@ornl.gov (M. Langholtz).
http://dx.doi.org/10.1016/j.crm.2014.05.001
2212-0963/Published by Elsevier B.V.
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/3.0/).
Please cite this article in press as: Langholtz, M., et al.. Climate Risk Management (2014), http://dx.doi.org/10.1016/j.crm.2014.05.001
M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx
2001 to 2011 (BP, 2012). Over that same time period, the United States emerged as the single largest national producer of
biofuels, accounting for 48% of global production. The growth in biofuels has been driven by two energy-related policy challenges. First, biofuel development has been pursued as means of reducing environmental externalities of traditional fossil
fuels. Ethanol was adopted as a fuel additive under the U.S. Clean Air Act Amendments (U.S. Environmental Protection
Agency, 2012; USEPA, 2012) and the Alternative Motor Vehicle Fuels Act (USGPO, 1988) as a means of reducing particulate
air pollution from transportation. Increasing awareness of climate change as another externality of energy use has provided
additional incentives to the use of biofuels in order to offset carbon emissions from traditional fossil fuels. Second, and more
recently, a growing national emphasis on energy security has been a key driving force for domestic biofuel production. While
almost all the 57 billion liters of U.S. ethanol production in 2012 was derived from corn, policies are designed to foster commercialization of biofuels from non-food crops, specically lignocellulosic biomass. For example, the Energy Policy Act of
2005 (USGPO, 2005) and the Energy Independence and Security Act (EISA) of 2007 (USGPO, 2007) substantially increased
the targets for ethanol production, setting a production goal of 136 billion liters of cellulosic biofuels by 2022 (U.S.
Environmental Protection Agency, 2005, 2007).
While bioenergy, including biofuels and biopower, has received signicant attention in the literature as a technology for
offsetting future greenhouse gas emissions from energy (Adler et al., 2007; Campbell et al., 2008; Field et al., 2008; Schneider
and McCarl, 2003), the potential vulnerability of bioenergy production to extreme weather events, climate variability, climate change, and overall climate risk1 has received comparatively little (de Lucena et al., 2009; Dominguez-Faus et al.,
2013; Haberl et al., 2011; Poudel et al., 2011; Schrter et al., 2005; Stone et al., 2010; Tuck et al., 2006; Wilbanks et al.,
2012). Recent assessments of the implications of climate change for U.S. energy systems, for example, acknowledge the potential climate sensitivity of bioenergy (CCSP, 2007; Wilbanks et al., 2012), yet contain little discussion of the timing and magnitude of future impacts for different bioenergy resources. As with agricultural and forestry production, bioenergy is highly
exposed and sensitive to weather and climate (Wilbanks et al., 2012), and thus may be more vulnerable than other energy
sources. For example, Eaves and Eaves (2007) found that the price volatility of grain ethanol is higher than that of gasoline
imports due to the impacts of weather. Given predictions that extreme weather events will increase in frequency, duration,
and/or intensity (IPCC, 2012), climate risk to biofuels derived from agricultural and forest enterprises would also be expected
to increase. The current policy emphasis on cellulosic bioenergy production, as well as the important role of bioenergy in
enhancing energy security and reducing climate risk, suggests greater attention to the implications of climate risk for the industry is warranted. As a case-in-point, the U.S. drought experienced during 2012, and its impacts on the agricultural sector,
represents a teachable moment for the biofuels industry. As an estimated 1 in 30 years event, it was the rst signicant,
national-scale drought event to coincide with the emergence of the U.S. bioenergy industry. The consequences revealed potential vulnerabilities of the bioenergy supply chain, potential trade-offs among different technologies and feedstocks, as well as
opportunities for future risk management. With projected demand of approximately 225 million dry Mg of biomass needed
by 2022 to meet EISA targets (Langholtz et al., 2012) and the likely continued expansion of cellulosic bioenergy in future
decades, robust climate risk management in the bioenergy industry will be an important component of its evolution and its
contributions to meeting U.S. energy security and environmental goals.
Here, we review climate risk to the U.S. bioenergy industry, with a particular emphasis on cellulosic biofuels, which are
currently an arena of intensive research and development. We frame our review around a risk-management framework to
identify direct and indirect climate hazards, assess exposure, and explore key vulnerabilities, with an emphasis on learning
from recent experience with extreme weather events such as the 2012 drought. We also identify risk management strategies
for the bioenergy supply chain that may be starting points for adaptation efforts as well as key knowledge gaps that must be
addressed through future research and development efforts toward a climate-resilient cellulosic bioenergy supply chain.
Framing climate risk to the bioenergy supply chain

The bioenergy supply chain is comprised of a broad range of assets and infrastructure, both public and private, which
have differential vulnerabilities to climate risk (Fig. 1). While much of the focus of biofuel analysis targets the land used
to produce biofuels, the industry is dependent upon a more elaborate supply chain that is in some ways analogous to that
of other forms of energy (Parish et al., 2013). The foundation for the bioenergy supply chain is the production of bioenergy
feedstocks on farms, forestlands, or marginal lands. For cellulosic-based fuels, feedstocks could include crop residues such as
corn stover (the most abundant U.S. cellulosic feedstock at present) (Kadam and McMillan, 2003), direct production of
energy crops including annual (e.g., sorghum) or perennial (e.g. switchgrass and Miscanthus) herbaceous crop, as well as
woody biomass crops (McKendry, 2002). Once harvested, these feedstocks are stored onsite or transported to bioreneries
or long-term storage facilities. Bioreneries may store feedstocks for short periods of time and facilitate additional preprocessing before biomass enters the biochemical or thermochemical rening process. Depending on the renery, the
products of rening include liquid fuels such as ethanol as well as syngas, which can be converted to a range of products.
1
We use the term extreme weather event to indicate a singular occurrence such as a hurricane or storm, climate variability to specify variation from
expected climate averages, and climate change in the conventional sense indicating long-term (multi-decade) trends. In this paper we use the term climate
risk to mean risk associated with extreme weather events, climate variability, and/or climate change, and we use the specic terms where the distinctions are
relevant.
Fig. 1. Examples of conventional biofuel feedstock supply chain.
Rening also can be coupled directly to the generation of heat or electricity (biopower), or rened products (e.g. chemicals,
sugars, and bers) can be delivered to other consumers and end users.
To explore potential climate risks to the bioenergy supply chain, we adapted a risk framework published under the
auspices of the Intergovernmental Panel on Climate Change (Lavell et al., 2012). That framework presents risk as function
of weather and climate events (or hazards), vulnerability, and exposure (Fig. 2). The weather and climate events are a
product of both natural variability and anthropogenic climate change. Meanwhile, the manner in which the industry evolves,
through innovation and upscaling, will inuence the exposure of different supply chain elements to climate variability and
change as well as the capacity of different actors to cope with stress and exploit opportunities for adaptation. The following
sections explore each of these aspects of climate risk, from exposure to climate and weather hazards, to the vulnerability of
different elements of the supply chain. The various options and strategies available to different actors to manage risks to the
supply chain are discussed as well as key knowledge gaps that will need to be addressed to improve future climate risk
management and adaptation.
Fig. 2. Bioenergy supply chain risk management framework (IPCC, 2012).
Exposure of cellulosic biofuels to direct and indirect climate-related hazards

To assess the exposure of the cellulosic bioenergy supply chain to climate-related hazards, consideration must be given to
two general categories of hazards. First, the supply chain may be exposed directly to hazards such as extremes of weather
and climate that result in direct loss and damage to supply chain elements. Second, the supply chain may be exposed indirectly to non-climatic biological and ecological hazards that are nevertheless inuenced by climate such as pests and disease.
Each of these categories is discussed further below.
Direct climate hazards
Extreme weather events represent signicant natural hazards to the bioenergy supply chain. First and foremost, such
extreme events pose a signicant risk to agricultural and forest lands, which ultimately affects biomass for bioenergy. For
example, over 90% of crop loss indemnity payments between 1989 and 2012 were attributed to extreme weather events,
equivalent to over $80 billion (Fig. 3; RMA, 2013). Drought alone is by far the single-biggest climate-related threat to agriculture, accounting for 40% of indemnity payments. Such impacts are a function of the location of signicant agricultural
enterprises on hazardous landscapes. To explore the exposure of current bioenergy feedstocks as well as future feedstocks
to climate extremes, we developed a series of hazard indices for the United States based on historical event information from
1950 to 2011 (see supplementary data). These indices included drought (as measured by the Palmer Drought Severity Index
(PDSI), hail, wind, tornadoes, tropical cyclones, and wildre. Indices were developed by calculating the density of events on
the U.S. landscape (weighted by event intensity) based upon the location of historical events. Data on historical events were
obtained from the National Climatic Data Center (PDSI; NCDC, 2013a), the National Weather Services Storm Prediction
Center (hail, wind, tornadoes, tropical cyclones; NOAA, 2013), and the U.S. Geologic Survey (wildre; USGS, 2013). Hazard
indices were aggregated to the county level and used to identify exposure hotspots for different types of extreme weather
events (Fig. 3), based upon observations over the past few decades. While these hazard indices do not represent the entirety
of potential climate-related threats to agricultural and forestland systems, they do span the majority of loss events reected
by insurance indemnity payments (Fig. 3). Meanwhile, indices of climatic extremes do not account for future changes in the
frequency, intensity, or duration of extreme events, due to persistent challenges in modeling such extremes and the
relatively near-term outlook of available biomass projections.
While cellulosic biomass remains an emergent feedstock for bioenergy, its contribution to overall U.S. bioenergy production is projected to grow rapidly over the next few decades in order to meet production targets set by EISA. Hence, to assess
cellulosic feedstock exposure to such hazards, we utilized current county-level estimates and future projections of cellulosic
feedstock harvests from the POLYSYS bioenergy modeling framework (De La Torre Ugarte and Ray, 2000) and U.S. Department of Energys Billion-Ton Update (USDOE, 2011). These projections indicate traditional agricultural areas of the United
States such as the Great Plains and the upper-Mid West will be key sources of bioenergy feedstocks over the rst half of
Fig. 3. Attribution of agriculture indemnity payments (19892012) to different hazards (RMA, 2013).
the 21st century (Fig. 4). This geographic pattern is largely driven by residues of traditional agricultural crops such as corn,
which is particularly prevalent in the upper-Mid West, while other crops (e.g., annual energy crops, perennial grasses) are
largely associated with the Great Plains states.
Overlaying the hazard hot spots with the projected distribution of cellulosic bioenergy indicates that the nations current
and projected area supporting cellulosic feedstocks will be exposed to climate risk (Figs. 4 and 5). Baseline estimates of
cellulosic feedstocks indicate that the approximately 59 million acres of current production is concentrated in areas that
are disproportionately exposed to certain types of climate extremes including drought, hail, wind, and tornadoes (Fig. 5).
By 2030, an additional 33 million acres are projected to be harvested, with much of that production also occurring disproportionately in regions that have historically been particularly exposed to these same four hazards. As a consequence, by
2030, the bulk of the harvest area will lie in not just one, but multiple hotspots for extreme weather events (Figs. 4 and
5). While exposure alone does not necessarily translate into a loss, transient and persistent climate hazards associated with
climate variability and change are important components of the calculus of risk.
In addition to a greater concentration of feedstocks in regions of the United States exposed to weather extremes, evidence
indicates that such extremes have already become more severe (IPCC, 2012; Min et al., 2011; Pall et al., 2011; Shefeld and
Wood, 2008; Van Aalst, 2006) and may continue to do so in coming decades (IPCC, 2012). Although robust understanding of
the future spatial and temporal dynamics of extreme events remains elusive, changes in the dynamics of extremes would
have important implications for exposed biomass (CCSP, 2008a,b; Rosenzweig et al., 2001). Projections of climate change
indicate that rising temperatures in future decades are likely to increase evaporation resulting in more frequent drought
events (CCSP, 2008b; Dai, 2012; Strzepek et al., 2010; Trenberth et al., 2014). These trends hold for more recent results from
the models participating in the IPCCs Fifth Assessment Report (AR5) (Dai, 2012; Zhou Tian-Jun, 2013) as well as those of the
previous AR4 (Dai, 2011b; Shefeld and Wood, 2008; Strzepek et al., 2010; Wehner et al., 2011). Nevertheless, there is
signicant debate in the literature regarding the evaluation of drought trends and, in particular, the robustness of different
metrics for undertaking such evaluations (Dai, 2011a; Shefeld et al., 2012; Strzepek et al., 2010; Trenberth et al., 2014; Van
der Schrier et al., 2011; Vicente-Serrano et al., 2011; Zhou Tian-Jun, 2013). Furthermore, details of the projected drought vary
with the emission scenario and the model or models used and there are of course uncertainties surrounding the projections
(Burke and Brown, 2008). There is a tendency for the models to overestimate drought duration, frequency and intensity of
drought when compared to observations of the 20th century, but the trend of increasing drought across the United States
through the 21st century appears robust (CCSP, 2008b). Meanwhile, rainfall is likely to be less frequent, but more intense,
resulting in more rainfall extremes. Some studies have translated such changing precipitation regimes into an increase in
ood risk (Hamlet and Lettenmaier, 2007; Milly et al., 2002), yet national estimates of ood risk for the U.S. at the scale
of agriculture are limited. Wildres and hurricanes are also projected to become more extreme (Holland, 2012; Knutson
et al., 2010; Spracklen et al., 2009; Webster et al., 2005; Westerling et al., 2006). Although such hazards largely affect areas
around the margins of cellulosic feedstock production, individual enterprises may be exposed. Projections for other types of
hazards that affect U.S. agriculture such as hail are less readily available. Extremes will also affect forestry systems through
changes in disturbance regimes including potential dieback of forest stands (Dale et al., 2001, 2011a,b, 2009; Shugart et al.,
2003). Despite the well-documented hazard posed by climate extremes to agriculture and forestry enterprises, agricultural
models consistently fail to account for the effects of extreme weather events such as hail, oods, or high winds (Archer and
Johnson, 2012; Brown and Rosenberg, 1999; Rotter et al., 2011; Soussana et al., 2010; Tubiello et al., 2007; Zhang et al., 2010)
a knowledge gap that ultimately affects risk assessment and strategic planning for bioenergy crops as well.
Indirect climate hazards
In addition to direct exposure to climate, cellulosic feedstocks may also be exposed to the indirect effects of climate
change including impacts on weeds, insect pests, and diseases (Royle and Ostry, 1995; Tubiello et al., 2007). McDonald
et al. (2009) observe changes in the competitive advantage between damaging weeds in response to higher temperatures
(Valerio et al., 2011; Ziska, 2001). In addition, increasing atmospheric CO2 may alter interactions between plants and insect
herbivores (Stacey and Fellowes, 2002; Zvereva and Kozlov, 2006). Similarly, climate change has been implicated in epidemics of forest pests in the Western United States including bark beetles (Bentz et al., 2010) and the Mountain Pine Beetle
(Aukema et al., 2008; Hicke et al., 2006; Kurz et al., 2008). Exposure to such pests may be exacerbated by monoculture
management conditions that arise in production systems (Tuskan, 1998). While there is signicant research and management experience associated with the agriculture and forestry industries with respect to weeds, pests, and disease, there
has been limited investigation of potential changes in the spatial distribution and damages associated with such hazards
focused on climate/energy feedstock interactions (Perlack et al., 2005).
Key vulnerabilities of the biofuel supply chain
To assess risk to the bioenergy supply chain, consideration must be given to not just whether elements of the supply chain
are exposed to climate hazards but also the potential vulnerability of those elements that may create conditions that allow
exposure to be translated into harm. As a starting point, we draw on the work of Lynch et al. (2008), ONeill and Hulme
(2009), and ONeill and Nicholson-Cole (2009) regarding the use of iconic extremes as vehicles for understanding
Fig. 4. Spatial distribution of current (2012) and projected (2030) cellulosic bioenergy feedstock harvests in the continental United States as well as
comparison of projected with historical hotspots for extreme weather events. Cellulosic feedstocks include annual energy crops, perennial grasses, woody
biomass, corn stover, wheat residues, and sorghum residues. (A) current harvest and locations of bioreneries. (BD) Projected harvests and historical hot
spots for extreme weather events (based on observations from 1950 to 2011; see supplementary data for discussion of methods and data sources): (B)
severe drought; (C) hail; (D) wind; (E) tornadoes; (F) wildre; (G) hurricanes.
Fig. 5. Distribution of bioenergy feedstock harvest area among U.S. counties classied into different natural hazard exposure categories. (A) Bioenergy crop
harvest area in 2012 exposed to different hazards (see supplementary data for discussion of methods and data sources). (B) Exposure of additional harvest
area projected by 2030 to different hazards. Harvest areas corresponding to the 1st quintile are associated with the lowest risk of exposure while those of
the 5th quintile are associated with the highest risk.
vulnerability and adaptation to climate change. In this context, the drought and its consequences for agriculture and current
bioenergy feedstocks is such an iconic event that can be used to frame vulnerability of the cellulosic bioenergy supply chain
to climate variability and change. Here, we review this event and use it as the basis for the development of a typology of key
vulnerabilities for the supply chain. Each of these vulnerabilities is then discussed further in the broader context of future
climate change and the evolution of cellulosic bioenergy.
Evidence from the 2012 drought

The drought of 2012 was characterized by signicant rainfall decits as well as record high temperatures in many parts of
western, central, and south central United States, particularly during late June and early July (NCDC, 2013b). In contrast, the
western Gulf Coast and Appalachians had normal precipitation (USDA, 2012a,b). By late-2012, the U.S. Department of Agriculture had designated 2245 counties in 39 states as disaster areas due to drought, equivalent to 71 percent of the United
States by area (USDA, 2013b). This included many regions that are signicant producers of biomass for bioenergy. For many
areas of the U.S. South, 2012 was the second consecutive year of signicant drought (Blunden and Arndt, 2012). These dry
conditions had a signicant impact on crop yields and agricultural production, highlighting the potential vulnerability of U.S.
agriculture and, by extension, the bioenergy supply chain to climate risk. At the same time, however, the drought revealed
how extreme conditions force trade-offs among different agricultural enterprises and how deliberate and autonomous
(i.e., market-based) coping mechanisms inuence how impacts are distributed.
The impacts of the drought were readily observed as decreases in crop yields and production for much of the central United States (USDA, 2013a), indicating favorable conditions in the Southeast were not sufcient to offset the losses in droughtaffected regions. Including grains, oilseeds, and hay, crop production was down by 7%, yet responses of individual crops
varied signicantly. Corn, for example, experienced a 13% decline in yield in 2012 relative to 2011 and a 16% decrease in yield
when compared to the 20012012 mean (Fig. 5). This contributed to reductions in corn utilization for both ethanol production and other uses ((AFDC, 2013c; EIA, 2012a); Fig. 6). Meanwhile, hay production declined 9% at the national level. These
national-scale impacts mask much more dramatic consequences at the state level (Fig. 5). Overall, grain production declined
by 8%, with feed grains (corn, grain sorghum, barley, and oats) declining 12%, while grain sorghum, barley, and oat production all increased relative to the previous year. Wheat production increased 13%. While U.S. soybean production, which
accounts for approximately 90% of oilseed production (ERS, 2013c), declined by approximately 3%, production of oilseeds
(e.g., soybeans, canola, cottonseed, peanuts, and sunowers) overall were up, largely due to signicant increases in the area
planted and harvested in 2012 relative to 2011 (USDA, 2013a). In spite of the severity of the drought of 2012, the 7% decline
in crop production in 2012 was surprisingly low. This is due to a range of factors including signicant production from irrigated land (ranging in 2008 from 4% of wheat production to 92% of rice), winter wheat was grown and harvested before the
drought started, and corn varieties have become better at withstanding drought (Schill, 2012). This highlights the importance of the timing of extreme events and land management practices with respect to the inuence of drought on production. The drought of 2012 does not appear to have greatly affected crop production for 2013. There was some concern for the
winter wheat harvest in Spring/Summer 2013, but based on planted area, yield of the winter wheat crop harvested in 2013 is
forecast to decline by 10% relative to 2012, and is 2% higher than the average yield from 2001 through 2011. Overall crop
production (grains and oilseeds) for 2013, as of June 2013, is forecast to be the highest recorded.
The decline in crop production resulted in an increase in crop prices. Prices received by farmers for 2012 crops (based on
prices through June 2012 and estimated for the rest of the marketing year) of corn, winter wheat, and soybeans were up by
12%, 14%, and 15%, respectively, while prices for hay were down about 2%, compared to the 2011 marketing year. The price
for corn, in particular was the highest since the introduction of ethanol as a fuel additive in the late 1980s (Fig. 6). As of June
Fig. 6. Historical trends in corn production and ethanol prices were obtained from the Alternative Fuels Data Center (AFDC, 2013a; AFDC2013c). Data on
market year corn prices (19862011) were obtained from the Alternative Fuels Data Center (AFDC, 2013b) in 2007$ and extended to 2012 with data from
the National Agricultural Statistics Service (NASS, 2013). Ethanol prices were obtained in current dollars and converted to constant 2007 dollars following
the conversions for ination-adjusted corn prices reported in (AFDC, 2013b) using the consumer price index.
2013, prices were up for all farm products by 12% from 2011 (calendar year) but up by 42% relative to 2010. These higher
prices had downstream impacts on consumers. For example, the crop part of the prices received by farmers was up 14% over
2011 and 51% over 2010. Yet, farm-level costs made up only 16% of consumer food prices in 2008 (Canning, 2011). Hence, the
Economic Research Service of the US Department of Agriculture estimated that consumer food prices increased 2.6% in 2012
and are forecast to increase 2.53.5% in 2013 (ERS, 2013a). The impact on meat prices was expected to be modest in the short
term, because meat producers liquidate some of their animals in response to higher prices and the unavailability of feed
(e.g., pastures producing minimal feed). One response of the U.S. government to the 2012 drought was to allow grazing
on 1.5 million ha of Conservation Reserve Program (CRP) land, which increased hay equivalent supplies. Livestock and product prices were up 11% over 2011 as of June 2013. Larger impacts can be expected over the long-term. Meanwhile, the high
price for corn contributed to ethanol reaching its highest price in over a decade, and was more than twice the price observed
in 2000 (Fig. 6). This economic disruption was attributed in part to competition for corn between fuels and food/feed/ber
(Babcock, 2012; Larson et al., 2010).
While crop production was down in 2012, farmer revenues in the United States for crops (in the aggregate) actually
increased by 3% because prices increased more than production decreased (see supplementary data). This is an indication
that crop demand is inelastic (i.e. the percent increase in price is more than the percent decrease in quantity). Hence, nancial impacts to producers at the national level were offset by the market, yet this resulted in adverse impacts on consumers
forced to pay higher prices. This affected the protability of ethanol production as well because the spread between ethanol
and corn prices narrowed, shrinking prot margins and, ultimately, ethanol production (EIA, 2012b). Furthermore, these
national impacts mask regional disparities, which become evident by examining crop revenues for ve states: Indiana, Minnesota, Mississippi, Missouri, and Pennsylvania (see supplementary data). Indiana and Missouri were hard hit by the drought
of 2012, while the other states were not. Revenue decreased in Indiana and Missouri by 8%, while revenue increased by about
2025% in Mississippi and Pennsylvania and 8% in Minnesota (Table 1). However, prot did not increase proportionally with
revenues, because production costs increased as well. Therefore, overall crop prot in 2012 was estimated to be down only
4% (ERS, 2013b).
When experience with the 2012 drought is viewed through the lens of bioenergy supply chain, it suggests that bioenergy
systems have three critical areas of vulnerability, which are applicable across climate-related impacts in general:
Vulnerability of cellulosic feedstock production and supply Reductions in the production and subsequent supply of
feedstocks due to adverse impacts of extreme weather and climate change.
Vulnerability of biofuel supply chain infrastructure Disruption of biorening operations and subsequent supply of
biofuels due to reduced availability of feedstocks, interruption of transportation networks, and/or direct damage to
bioreneries and supporting utilities and resources (e.g., electricity, water).
Vulnerability to market prices Volatility in market prices for bioenergy feedstocks and rened products that affects
producer and/or consumer welfare and the competitiveness of feedstock production relative to conventional crops.
Each of these vulnerabilities is discussed further below, with particular emphasis on the level of understanding and
current knowledge gaps relevant to risk management.
Vulnerability of cellulosic feedstock production and supply
As evidenced by the 2012 drought, the rst-order consequences of climate risk will manifest as impacts on the production
of cellulosic feedstocks (Porter and Semenov, 2005). The vulnerability of specic cellulosic feedstocks is contingent upon a
range of factors that span local growing conditions (e.g., weather, climate and soil), physiological characteristics of individual
feedstocks (Barney et al., 2009; Erickson et al., 2008; Oosterhuis et al., 1990), and the management practices of producers
(Table 2). Much of current understanding regarding feedstock vulnerability is based on drought. Among annual grasses,
for example, biomass sorghum is considered to be an attractive energy crop candidate because of its high yield potential,
rapid maturation, high water-use efciency, and drought tolerance (Rooney et al., 2007; Turhollow et al., 2010). In contrast,
other annual grasses such as corn are sensitive to moisture stress, regardless of the growth stage (Bai et al., 2006; Boyer,
Table 1
Crop revenue for 2012 among select drought-affected states as compared with revenue for 2011 (see supplementary data). Major crops include corn, sorghum,
barley, oats, wheat, rice, soybeans, and upland cotton.
State
Indiana
Minnesota
Mississippi
Missouri
Pennsylvania
United States
Crop revenue for major crops (millions of US$)

2011
2012
8828
13,294
2473
5895
1610
167,224
8103
14,330
3010
5477
1999
172,106
2012 as a percentage of 2011 (%)
91.8
107.8
121.7
92.4
124.1
1.0
10
1970; Dominguez-Faus et al., 2013; Nagy et al., 1995). However, while current ethanol production from corn is dependent on
corn grain, cellulosic biofuels utilize corn residues for which the implications of drought can be quite different. A failed grain
harvest may leave signicant residue biomass that can be exploited for bioenergy. Producers growing conventional crops
such as corn can hedge against uncertainty and/or adversity by exploiting both grain and biomass residue markets, and
annual planting provides exibility to producers in terms of being able to switch crops over relatively short time scales in
response to changing environmental conditions. Corn is also routinely covered under crop insurance schemes.
Perennial herbaceous plants, such as switchgrass, which has been identied by the U.S. Department of Energy as a
model high-potential energy crop (McLaughlin and Kszos, 2005; Wright and Turhollow, 2010), and Miscanthus x giganteus
are also vulnerable to drought (Barney et al., 2009). Yet, various characteristics of perinneals may offer some competitive
advantage under drought stress, one of which is root depth. As observed in the 2012 drought, for example, hay (a perinneal
grass) production declined less than corn (an annual grass) (Fig. 7). Among dedicated bioenergy crops, Switchgrass has a
relatively extensive and evenly distributed deep root system (>3 m in depth), compared with Miscanthus for which 90%
of root biomass occurs in the top 0.35 m soil (Monti and Zatta, 2009). This enables switchgrass to capture water from deep
soil, especially during dry periods (Eggemeyer et al., 2009; Monti and Zatta, 2009). Switchgrass has the highest root/shoot
ratio across C4 grasses, which is a common characteristic among drought tolerant plants (Xu et al., 2006). Brown et al.
(2000) projected switchgrass yields in Kansas would benet from future higher temperatures and CO2 concentrations, in
contrast with grain crops that would face increasing stress. Woody biomass conveys a particular advantage in that it can
continue to be stored in situ and used as a feedstock, even in the event of the death of the plant. Disturbance of forestlands
due to extreme conditions such as drought or storms (e.g., wind wood), for example, may result in dieback of trees (Shugart
et al., 2003), generating signicant woody biomass that could be harvested for bioenergy (Curry et al., 2008; Escobedo et al.,
2009; Staudhammer et al., 2011). Such characteristics suggest potential advantages of cellulosic feedstocks in general, and
switchgrass as well as woody biomass in particular, in terms of resilience to climate risk. Furthermore, once planted, perennial grasses and woody biomass dont require annual replanting and there is exibility in terms of when they are harvested
(Hall and House, 1994). This insulates these feedstocks from the vulnerabilities associated with annual planting and harvesting windows, although it creates some degree of investment lock-in for producers, which discourages switching of crops
from one year to the next. In addition, perennial herbaceous grasses and woody biomass may be exposed to weather
variability over a longer time period, which may increase its likelihood of experiencing an adverse weather event over its
production cycle.
Less information is available regarding absolute and relative vulnerabilities of different feedstocks to other climate
hazards. Excess moisture and ooding has been shown to adversely affect a range of current biofuel feedstocks including
Table 2
Characteristics of cellulosic bioenergy feedstocks that inuence their vulnerability or resilience to climate variability and change.
Characteristics
Resilience to
extreme
conditions
Resistance to
disease and
pests
Short (1 year)
maturation
time
Perennial growth
Infrequent
planting,
exible
harvest
window
Flexibility in end
use
Insurability
Example
feedstocks
Varies
depending on
crop breeding
efforts
Varies
depending on
crop breeding
efforts
Sorghum
Corn residue
Energy cane
Woody
biomass
Switchgrass
Energy cane
Miscanthus
Miscanthus
Switchgrass
Woody
biomass
Corn
(grain
and residue)
Woody
biomass
Corn
Advantages
Vulnerabilities
Enables plants to cope with climate variability and

change
None
Enables plants to cope with disease and pests along

and/or in combination with climate variability and
change
None
Enables production during relatively short windows

of favorable weather conditions
Enables relatively rapid switching to alternative
crops as conditions change
Enables plants to become established (e.g., deep
root system) and enhances drought tolerance
Associated with shallow root depths and less

able to cope with prolonged adverse
conditions
Once established, does not require annual replanting, which is prone to climate risk. Enables exibility around variable weather conditions
Establishment period may be extended

(>2 years) depending on climate variability.
Variable time to achieve expected yields
Enables crop biomass to enter different markets and

therefore hedge against uncertainty
Provides revenue security for producers
Reduces incentives for exploitation of other

energy crops
Reduces security of biomass supply
Provides revenue security for producers
Reduces incentives for exploitation of other

energy crops
Moral hazard
Constrains exibility in crop switching
11
Fig. 7. Corn and hay yields among select U.S. states in 2012 relative to the 10-years mean (20012012). Source: data from annual U.S. Department of
Agriculture Crop Production Summary reports (USDA, 2013a).
soybeans (Oosterhuis et al., 1990), corn (Subbaiah and Sachs, 2009; Yan et al., 1996; Yordanova and Popova, 2007; Zaidi et al.,
2004); and sugarcane (Gilbert et al., 2008; Viator et al., 2012). Naidu and Long (2004); Casler et al. (2007 and 2004)
investigate thermal tolerances of Miscanthus and switchgrass; and while insurance indemnities and the literature identify
hail as a signicant agricultural hazard (Fig. 3; Rosenzweig et al., 2002), there is little evidence to document differential
vulnerability among potential feedstocks. Furthermore, vulnerability to extreme weather conditions may decline over time.
Various sources of biomass currently being explored as bioenergy feedstocks have not beneted from decades of genetic
manipulation to develop cultivars more resilient to climate, pests, and disease (JM-F et al., 2007), and thus their long-term
potential for sustainability in the face of climate and weather extremes remains unknown. Hence, there is signicant opportunity for more comprehensive evaluation of the vulnerabilities of different feedstocks and cultivars over different spatial
and temporal contexts.
In addition to the well-documented effects of acute extreme weather events on agricultural systems, climate change can
also have chronic impacts on bioenergy feedstocks through long-term shifts in the suitability of different ecoregions to feedstock production (Barney and DiTomaso, 2010; Tuck et al., 2006) and, in particular, through impacts on water availability.
Chiu et al. (2009), for example, estimate that 1 L of ethanol currently requires 248780 L of irrigation water, although regional requirements vary with irrigation practice (de Fraiture et al., 2008; NRC, 2008; Pimentel, 2003; Pimentel and Patzek,
2005; Wu et al., 2009). Furthermore, as bioenergy has expanded into new areas that are more dependent upon irrigated
cultivation, the embodied water in ethanol has increased (Chiu et al. (2009)). In fact, current production of biodiesel and ethanol from conventional crops is associated with rates of water consumption per megawatt hour that are at least an order of
magnitude higher than other energy systems (USDOE, 2006). Hence, questions have been raised regarding the value of
bioenergy to sustainable energy production (Dominguez-Faus et al., 2009). Given climate change has been identied as a
potential threat to water resource availability to other energy sources (e.g., (Averyt et al., 2011; Cooley et al., 2011; EPRI,
2011)), climate change impacts on water availability may exacerbate the high water demands associated with the
production of bioenergy feedstocks.
For bioenergy supply chains, consideration must be given to not only the yields generated by feedstocks, but also the
efciency and protability of biomass harvest and collection operations. The harvesting and transport of biomass incur costs.
For biomass feedstocks, like high-yielding dedicated energy crops, reductions in yield per unit area translates into increased
harvest costs on a per-ton basis (Sokhansanj et al., 2009). If yield impacts become sufciently large, the harvesting of
biomass may become cost-prohibitive. In addition, such crops tend to be more geographically distributed than traditional
commodity crops making transportation costs to bioreneries a larger component of their price. Reduced productivity
and/or availability of these crops that expands the supply area only exacerbates transportation costs. These risks can be
mitigated to some extent through adaptive agronomic strategies (e.g. fertilizer and pest management regimes).
12
Vulnerability of bioenergy supply chain infrastructure

Biorening infrastructure and the services and natural resources that support those reneries are an important consideration with respect to climate vulnerability. Such vulnerabilities are likely to become increasingly important as the industry
expands in the future. Insights regarding infrastructure vulnerability can be acquired from the literature, based on whats
been reported for other renewable energies (e.g., solar, wind, hydropower) as well as conventional fossil fuel energy sources
(CCSP, 2007; Wilbanks et al., 2012). Such infrastructure can be adversely affected by climate change directly, particularly
through changes in extreme events that pose direct hazards to infrastructure. For example, ooding and wind damage
may disrupt operations at bioreneries by damaging infrastructure. Bioreneries can also be affected indirectly. Wilbanks
et al. (2012), for example, note that declines in feedstock production ultimately affect the availability of feedstocks to
bioreneries and subsequent production, although as noted previously, some disturbances can result in generation of
biomass that could be used by bioreneries. In addition, the electricity supply of bioreneries as well as the transportation
of feedstocks to (or products away from) bioreneries can be disrupted by extreme weather events that affect roads, rail,
pipelines, barge trafc, or the energy grid (EIA, 2012b; Wilbanks et al., 2012). Bioreneries, like other conventional energy
infrastructure, are also dependent upon signicant inputs of water. Water use averages 22.7 and 7.6 liters of water per liter
of ethanol for biochemical and thermochemical conversion processes, respectively (Foust et al., 2009), although these values
are small relative to the use of water for irrigation (see Vulnerability of bioenergy supply chain infrastructure). Increasing
concerns about water availability for future energy generally, and the water needs of bioenergy specically, suggest water
availability over both the short term (i.e., seasonal to inter-annual) and long term (i.e., multi-decadal) as a key consideration
for future investments in bioenergy infrastructure.
Vulnerability to market prices
The sustainability of the biofuels supply chain is dependent upon a range of market forces and incentives, with climate
risk representing a potential uncertainty in the stability and predictability of markets. Declines in feedstock production,
whether transient or persistent, would lead to constraints on the supply of bioenergy feedstocks to the supply chain resulting
in higher feedstock prices. As demonstrated by the 2012 drought, those higher prices can act to maintain producer revenue
and prots despite production impacts. Autonomous responses of the market can therefore assist producers in coping with
adverse conditions. However, impacts for individual producers in particularly hard-hit regions may be greater, particularly
for those growing dedicated bioenergy crops for which insurance is unavailable. For consumers of feedstocks, such as
bioreneries, however, those higher prices result in higher input costs and can erode the protability of such enterprises.
These costs may be exacerbated if a biorenery must exploit feedstocks over a larger area (with higher transportation costs)
to compensate for reductions in local production (see Vulnerability of bioenergy supply chain infrastructure). The biorenery
must, therefore, recoup those losses in the form of higher prices for rened products, which ultimately has adverse impacts
on end use consumer welfare.
Future expansion of bioenergy would potentially inuence the market impacts of climate variability and change on the
bioenergy supply chain. Much of the market impacts observed to date are a function of a) the lack of diversity in ethanol
feedstocks, which are predominantly derived from corn production and b) competition for corn among multiple end users
(fuel, feed, and food). For example, corn production has expanded since the introduction of ethanol into liquid fuels (Fig. 6).
However, as that expansion has been accompanied by a concomitant increase in demand for corn, prices for corn have grown
steadily over the past decade, peaking in 2012 at levels that hadnt been seen since the introduction of ethanol in the late
1980s (Fig. 6). While a positive development for producers, this adversely affects other elements of the supply chain. Expanding the range of feedstocks that can be utilized for bioenergy can enable both producers and downstream consumers to
hedge against climate and market uncertainties. As mentioned previously (see Vulnerability of cellulosic feedstock production and supply), greater use of conventional crop residues may provide producers with a source of revenue even when
grains or oilseed yields are not sufcient for harvest. Greater use of dedicated energy crops can enable producers to exploit
a broader array of landscapes (e.g., marginal agricultural land) and grow feedstocks over different time scales (e.g., perennial
and woody biomass). Meanwhile, downstream consumers could make use of a greater range of biomass resources that
reduces the impacts of price volatility associated with the success and failures of individual feedstocks. Collectively this
could result in a more resilient and competitive marketplace, with ancillary benets in terms of reducing the adverse externalities on other agricultural commodities, such as livestock, that have been attributed to the existing corn-based ethanol
bioenergy system. It should be noted, however, that as both food crops as well as biofuels generated from feedstocks are
commodities traded on international markets, domestic prices for food/feed/ber and biofuel will also be inuenced by
the impacts of climate risk on agricultural and forestry systems in other global regions.
Supply chain risk management strategies and opportunities
Given the various challenges that remain with respect to scaling up the cellulosic biofuels industry (Richard, 2010),
opportunities for risk management should be included in its future development. Yet, managing risk involves addressing
complex interactions at the nexus of land, water and energy (Dale et al., 2011b). Spatial and temporal patterns of biomass
13
production and industry development remain uncertain as do the policy and market environments at regional, national, and
global scales. These uncertainties are exacerbated by those associated with future climate and its inuence on extreme
weather events (IPCC, 2012). Multiple assessments, for example, have suggested the potential for increased agricultural
yields in the United States due to climate change and CO2-fertilization (Hateld et al., 2008). Similar results have been
reported in Europe (Schrter et al., 2005; Tuck et al., 2006). However, such effects are region and crop specic.
Dominguez-Faus et al. (2013), for example, project climate change will lead to declines in U.S. corn production despite
increasing irrigation. Hence, as evidenced by the drought of 2012 and the billions of dollars of indemnity payments made
to farmers in recent decades, yield impacts during extreme weather events are an inherent vulnerability of biomass-based
industries. Reduced yields and crop losses due to drought or ooding, competition with other industries (e.g., livestock feed,
ber, and biopower), and changes in material quality are climate-associated risks assumed by stakeholders along the biofuel
supply chain from biomass production, to biofuel conversion, to fuel use. With reduced biomass availability, operations
along the supply chain are subject to low utilization of resources (facilities, equipment, labor, etc.) and inefciencies associated with substituting biomass sources. These factors can signicantly increase the price and quality of products, which
can inuence the competitive position of an emerging industry. Success of a commercial biofuel industry will require strategic planning on behalf of stakeholders in order to optimize potential returns, while managing climate risk (Table 3).
Feedstock production and supply
Cellulosic feedstock producers have exibility to respond to changes in local weather and climate by employing strategies
such as irrigation, selection of drought-tolerant crop varieties, diversifying production, and the use of alternative tillage practices (Malcolm et al., 2012). As the timing of exposure to natural hazards is a factor affecting the impacts of climate risk on
feedstock production, feedstocks should be evaluated for their potential to balance productivity, resilience to climate and
weather, and supply chain efciency with respect to logistics (see Supply chain logistics). Our review of the assessment
of the vulnerability of cellulosic feedstocks suggests that there are multiple characteristics that inuence the relative vulnerability and resilience of different feedstocks. If one focuses on maximizing the resilience of feedstocks themselves, the establishment period (i.e., site preparation, planting, and early growth) is the period when young plants are most vulnerable to
drought, ooding, or other events. In this regard perennial grasses and woody biomass offer distinct advantages due to
greater capacity to cope with weather extremes. On the other hand, when one focuses on exibility in crop management,
both annuals and perennials offer distinct advantages. The former allows for relatively frequent crop switching to allow
for changing weather and/or market conditions. The latter however, allows for exibility in harvest times, which can also
be leveraged to provide market advantage and/or respond to favorable or unfavorable climate conditions. Other common
management practices, such as irrigation during establishment and other sensitive periods, could prove an effective strategy
for managing drought stress, although this practice may be constrained by water availability. If, however, such irrigation can
use water recycled from other uses, this would reduce pressure on water resources (Stone et al., 2010). For woody biomass
and forestland, a range of forest management practices may assist in adaptation to reduce vulnerability (Millar et al., 2007;
Ogden and Innes, 2007; Spittlehouse and Stewart, 2003). These include strategies to increase resilience to drought, re and
disease, such as forest thinning and species diversication (Blate et al., 2009; CCSP, 2008a), as well as strategies to better
enable forest managers to make use of biomass debris generated by such disturbances when they do occur (Curry et al.,
2008; Escobedo et al., 2009). Over the long term, investments in research could lead to genetic improvements that make bioenergy crops and tree varieties more resilient to stress (Oliver et al., 2009). Other innovative agronomic practices could be
scaled up to improve energy crop production. For example, (Ghimire and Craven, 2011) found that cocultivating the ectomycorrhizal fungus Sebacina vermifera with switchgrass resulted in signicantly higher biomass yield during drought stress
than control plants during normal conditions. Finally, while insurance is increasingly being adopted in the United States
as a mechanism for managing climate risk to agriculture (Cabrera et al., 2006), the absence of insurance programs for dedicated biomass feedstocks puts cellulosic feedstocks at a competitive disadvantage with respect to climate risk management
relative to conventional crops. The rising public cost of the U.S. crop insurance program as well as criticism of the subsidies
has raised questions regarding its long-term sustainability (Glauber, 2013; Goodwin and Smith, 2013; Woodard et al., 2012).
If and when reforms to insurance markets emerge, greater consideration for dedicated energy crop producers could be incorporated into that reform process.
Supply chain logistics
Those responsible for arranging and managing the supply chain from the eld to the biorenery, whether it be the producer themselves, a producer cooperative, an intermediate broker, or the biorenery, could face biomass shortages and
higher prices during times of drought. However, the structure of supply chain logistics will be dependent upon how the sector evolves in the future. Advancements in logistics and handling may create opportunities to streamline operations across
the supply chain and reduce exposure to climate risk. In the conventional biomass supply chain (Fig. 1), each biorenery
accepts only one crop in only one format (e.g., switchgrass bales or wood chips). In future designs, innovative supply chains
could be developed to convert raw biomass into an engineered feedstock handled and traded much like current agricultural
commodities. Intermediate facilities, or depots, located near the production elds (within 816 km) could grind bales of
herbaceous biomass; densify into a stable, owable physical format (e.g., pellets or cubes); and store until needed by the
14
Table 3
Summary of risks, strategies, and opportunities in the bioenergy industry due to extreme weather events summarized by stakeholder.
Stakeholder
Risks and opportunities
Feedstock producer
Loss of revenue due to adverse impacts on biomass

Loses to insects, pests, late freezes, ice storms, hail, hurricanes, etc.
Geographic shifts in suitable or optimal growing conditions for different feedstocks
Increased availability of biomass residue and debris
associated with ecosystem disturbance
Increased productivity associated with some bioenergy
crops due to climate shifts and CO2 fertilization
Supply chain management
Reduced availability leads to higher biomass prices

Increased competition for biomass for other uses (e.g.,
biopower, bioproducts, livestock feed)
Reduced efciency of supply chain as transport distances to secure needed volume of biomass increase
Biorenery
Feedstock shortages due to lower biomass availability

and increased competition
Higher feedstock costs
Input price volatility
Product price volatility
Short-term (seasonal) scarcity
Water availability for conversion processes
End use consumers
Public perception of food vs. fuel; social support of

renewable fuels
Effects on fuel prices
Retail price shifts
Substitutability of inputs
Strategies and opportunities

Irrigation during drought, particularly during crop
establishment
Once established, woody and perennial crops may be
less affected by climate variability and extreme events
relative to annuals
Selection of more drought-tolerant crops like forage
sorghum
Forest management to increase tree resilience
Genetic improvements for drought resistance
No-till or reduced till in annual crops
Adapting DSSs to include impacts of shocks caused by
extreme weather events
Expansion of crop insurance to cover a wider array of
energy crops
Advanced processing to increase bulk density (for
reduced transport costs) and convert biomass into a
uniform-format, commodity feedstock
Increase stability during storage making it possible to
stockpile feedstock
Develop standards or grading schemes to commoditize
biomass feedstocks
Increase capacity to utilize debris from forests and the
built environment
Purchase feedstock from biomass brokers to increase
available resources
Diversication of feedstocks that can be used
Conversion and handling technologies capable of
accepting feedstock from a variety of biomass sources
Flexibility to change production rate depending on
feedstock availability and cost
Enhancing road, rail, and barge access to accept feedstock from further locations
Select less water-intensive conversion technologies
Diversication of energy products
Development of alternative and available substitutes
Relax terms of trade
Loosen restrictions on use of inputs for ethanol production (using corn for food instead of for fuel)
Increase vehicle fuel exibility
biorenery (Hess et al., 2009; Richard, 2010; Sokhansanj and Hess, 2009; Sokhansanj et al., 2009). Such material could be
designed to meet standard physical (e.g., density, particle size) and compositional (e.g., moisture and ash content) criteria
optimized for particular conversion processes. Hess et al. (2009) suggest bulk density targets of 256 dry kg/m3 for bales
to be transported locally and greater than 481 dry kg/m3 for advanced feedstock commodities. In comparison, current balers
typically produce bales of switchgrass or stover weighing in the range of 140190 kg/m3. In an analysis by Sokhansanj et al.
(2009), increasing the bulk density of biomass feedstocks from baled biomass with an average density of 160 dry kg/m3 to
pellets with an average density of 600 kg/m3 decreased transportation cost by 21%. Richard (2010) estimates that to meet
projected demand at a large, commercial-scale biorenery, a truck would be unloaded every ve minutes around the clock.
Achieving higher bulk densities will not only reduce transportation and storage costs, but also reduce the frequency of deliveries to the biorenery, all of which reduce exposure to climatic events that might compromise the transportation infrastructure. Another strategy for dealing with biomass shortages is stockpiling of feedstock. Space requirements and the dry-matter
losses could make long-term storage cost prohibitive, yet the issue has received little critical analysis. Future advances in
feedstock preprocessing technologies may lead to more stable products that are suitable for multi-year storage. Commoditized feedstocks could also prove benecial in the event of feedstock shortages, as bioreneries are forced to purchase feedstock from a broader geographical area, including regions with more abundant biomass resources or those not affected by
current weather events. Commoditized feedstocks could be cost-effectively transported longer distances by rail or barge
and purchased from a wide range of suppliers rather than via direct contract with local producers.
Bioreneries
While there are a range of mechanisms for increasing the resilience and efciency of the supply chain between producers
and bioreneries, additional resilience can be achieved by focusing on the biorenery itself. As a starting point, meeting the
projected growth targets for future cellulosic feedstock production will require signicant expansion in the number and size
15
of U.S. bioreneries. Decisions regarding the siting of future facilities can have a signicant impact not only on the resilience
of individual facilities, but also the broader energy system. Key considerations with respect to siting are (a) proximity to
potential hazards (e.g., ood plains); (b) proximity to sufcient biomass resources; (c) proximity to sufcient water and
energy resources; and (d) proximity to transportation networks to end use markets (Melo et al., 2009; NCEP, 2006). In addition to citing decisions, biorenery design and operations can be used to hedge against uncertainty in the supply of feedstocks. For example, designing biorenery receiving areas and conversion systems capable of handling a wide range of
feedstock formats would enable them to capitalize on a broader array of feedstocks within a given distance (Mascia et al.,
2010; Scheffran, 2010) Yet, the potential tradeoffs in costs and benets associated with developing dense, owable feedstocks versus constructing a biorenery capable of accepting diverse feedstocks have not been explored. Biorenery design
is also relevant to other potential vulnerabilities such as the security of supply of electricity and water. Advances in recent
years have reduced the water usage in thermochemical processes and similar advances are needed, and can be obtained, for
biochemical processes. Meanwhile the use of combined heat and power systems within bioreneries can reduce their reliance upon the electricity grid.
End use consumers
Managing risks to end use consumers of bioenergy can be facilitated by enhancing exibility in upstream elements of the
supply chain to minimize the risk of climate or weather induced disruptions to energy supply and prices. This includes
broadening the range of feedstocks that can be used in bioreneries, which will reduce upward pressures on prices of
individual commodities due to demand for feedstocks when adverse weather and climate conditions arise. Such exibility
in bioenergy logistics will also enhance opportunities for the supply chain to capitalize on short-term (e.g., wind wood)
and long-term (e.g., CO2-fertilization effects in herbaceous grasses) benets of climate variability and change on feedstock
production. In addition to the logistics of feedstock management, diversication of available energy products for consumers
may reduce pressure on supply-constrained products. For example, ethanol has partially offset the use of gasoline in transportation, and experimental trials are underway with the use of ethanol as a diesel additive as well. Similarly, technologies
for transportation have diversied from gasoline and diesel engines to hybrid-electric, plug-in hybrid, and all-electric
vehicles. Meanwhile, liberalization of international trade in energy products may stimulate domestic production of
bioenergy and streamline the import and export of bioenergy products to better manage domestic supply and demand
(Elobeid and Tokgoz, 2008; Lee and Sumner, 2010).
Decision support for risk management
Because the production of cellulosic biofuel feedstocks takes place under conditions of uncertainty, decision science, an
area of the social sciences, must be included in the interdisciplinary mix of knowledge that seeks to address the complex
problem of managing climate and other risks to the biofuels industry (Garcia-Quijano et al., 2005; Giunipero and
Eltantawy, 2004; Mitchell, 2000; Neiger et al., 2009; Parish et al., 2013; Ramachandra et al., 2005). While documenting
the effects of climate risk and providing better climate forecasts to potential users would be benecial to climate risk management, such efforts in themselves are not sufcient (Fraisse et al., 2006; Tribbia and Moser, 2008). Because of the complex
interactions among biophysical, social, and institutional factors that affect agricultural systems, end users need decision aids
and technical assistance to bridge the gap that still exists between available climate forecasts and their routine applications
in agriculture (Meinke et al., 2009; Podesta et al., 1999). To this end, systematic and comprehensive decision support systems
(DSS) that are specic to the bioenergy industry will be needed as the industry matures. Such DSSs can help producers to
better understand the possible responses to climate forecasts and indicate risks associated with alternative responses in
order to obtain benets from a weather or climate forecast (Letson et al., 2001), not to mention forecasts of market conditions. Examples of some of the types of DSSs that have been developed or adapted for the bioenergy industry to date include:
biomass availability data sets (USDOE, 2011), agricultural policy models (English et al., 2006; Ray et al., 1998), supply chain
models (Sokhansanj et al., 2008), and crop production models (Nair et al., 2012). However, further renement of these tools
to include system shocks caused by climate variability is needed.
Conclusions
As the U.S. biofuels industry continues to evolve to make signicant contributions to future domestic and international
energy production, it will inevitably face challenges associated with climate risk. These challenges may be short term or persistent, that may be localized or diffuse, and their impacts may be experienced differentially across the supply chain. Yet, as
with conventional agricultural industries, stakeholders along the supply chain can cope and adapt. Some responses may arise
autonomously, such as the balancing of reduced feedstock production during adverse growing conditions with higher commodity prices that mitigate revenue and prot impacts. Other responses will be more deliberate. Feedstock producers can
opt to grow crops and varieties that are well-suited to drought and other extreme weather events, or they may choose management strategies that increase resilience. Commoditization of biomass feedstocks enables more cost-effective transportation and handling and makes it feasible to ship material from regions that may be spared droughts or extreme events and
16
with high availability, to facilities where feedstocks are limited. These advanced feedstocks also tend to be more stable in
storage and may make it possible to stockpile biomass. Bioreneries that are designed with exibility in feedstock specications, production rate, and products will benet during times when feedstocks are limiting. In practice, these strategies
will depend on improved understanding of climate risk and the mainstreaming of climate risk management into future
development of the industry.
Mainstreaming such risk management practices into the bioenergy supply chain will require increased awareness of both
the risks and opportunities associated with climate variability and climate change to stakeholders as well as greater investments in research and development efforts regarding climate risk (Table 1). As a path forward, collaboration is needed
between the climate science community and bioenergy feedstock supply and logistics experts to evaluate climate implications on the biofuels supply chain at different scales including feedstock production, logistics, rening, and commodity markets. Near-term efforts could include: (1) experimentation with regionally-downscaled models or coupled climate-crop
models to account for climate-associated uncertainty; (2) accounting for future climate variability and climate change uncertainty in national cellulosic feedstock supply and price projections; (3) developing mechanisms for reducing the water and
energy requirements of advanced processing technologies; (4) designing economical logistics and storage systems for densied biomass; (5) analyzing tradeoffs associated with different transportation and use of different feedstocks; (6) developing DSSs for different supply chain elements; and (7) employing social science research to insure that research and
development products are actionable within the context of drivers beyond climate. Attempts to manage climate risk, however, should also be cognizant of the potential externalities (social, economic, or environmental) that may arise from different management practices (Dale et al., 2013; McBride et al., 2011; Parish et al., 2013; Schubert and Blasch, 2010).This
collective knowledge should subsequently become part of the calculus regarding the potential contributions of cellulosic
bioenergy to U.S. energy security, air quality, and greenhouse gas mitigation objectives.
Acknowledgements
This project was funded by the U.S. Department of Energy Efciency and Renewable Energy Bioenergy Technologies Ofce
as well as by program development funds within Oak Ridge National Laboratorys (ORNL) Environmental Sciences Division.
ORNL is managed by UT-Battelle, LLC, for the U.S. Department of Energy under contract DE-AC05-00OR22725. Neither the
United States Government nor any agency thereof, nor any of their employees, makes any warranty, expressed or implied,
or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus,
product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any
specic commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily
constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof.
The views and opinions of authors expressed herein do not necessarily state or reect those of the United States Government
or any agency thereof.
Appendix A. Supplementary data
Supplementary data associated with this article can be found, in the online version, at http://dx.doi.org/10.1016/
j.crm.2014.05.001.
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Climate Risk Management For The U.S. Cellulosic Biofuels Supply Chain

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Contents lists available at ScienceDirect

Climate Risk Management

Climate risk management for the U.S. cellulosic biofuels supply

Environmental Sciences Division, Oak Ridge National Laboratory, United States

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

Framing climate risk to the bioenergy supply chain

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Fig. 1. Examples of conventional biofuel feedstock supply chain.

Fig. 2. Bioenergy supply chain risk management framework (IPCC, 2012).

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Exposure of cellulosic biofuels to direct and indirect climate-related hazards

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Evidence from the 2012 drought

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

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Crop revenue for major crops (millions of US$)

2012 as a percentage of 2011 (%)

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

 Enables plants to cope with climate variability and

 Enables plants to cope with disease and pests along

 Enables production during relatively short windows

 Associated with shallow root depths and less

 Establishment period may be extended

 Enables crop biomass to enter different markets and

 Reduces incentives for exploitation of other

 Provides revenue security for producers

 Reduces incentives for exploitation of other

 Constrains exibility in crop switching

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

Vulnerability of bioenergy supply chain infrastructure

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

Risks and opportunities

 Loss of revenue due to adverse impacts on biomass

Supply chain management

 Reduced availability leads to higher biomass prices

 Feedstock shortages due to lower biomass availability

End use consumers

 Public perception of food vs. fuel; social support of

Strategies and opportunities

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

BP (2012). BP Statistical Review of World Energy, June 2012, London, UK.

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M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

M. Langholtz et al. / Climate Risk Management xxx (2014) xxxxxx

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Enables plants to cope with climate variability and

Enables plants to cope with disease and pests along

Enables production during relatively short windows

Associated with shallow root depths and less

Establishment period may be extended

Enables crop biomass to enter different markets and

Reduces incentives for exploitation of other

Provides revenue security for producers

Reduces incentives for exploitation of other

Constrains exibility in crop switching

Loss of revenue due to adverse impacts on biomass

Reduced availability leads to higher biomass prices

Feedstock shortages due to lower biomass availability

Public perception of food vs. fuel; social support of